India narrows ‘green’ scrap gap

Annette Stube, head of sustainability at AP Moller-Maersk, was hailed as a hero at the 2016 TradeWinds’ Ship Recycling Forum in Dubai.

Industry stakeholders said Maersk’s decision to recycle ships at Alang was a much-needed boost in confidence for those Indian breakers that have put in the time and effort to upgrade their facilities to internationally accepted levels.

While both Stube and Maersk faced a high degree of criticism when it was announced in February that the company was prepared to recycle ships in India, she was greeted with a round of applause when she took to the podium at the forum.

Stube maintained that conditions in Alang would only improve if owners play an active role and support yards that are making the effort to improve.

“It was the right thing to do,” she said. “We wanted to be an active partner on the ground rather than a bystander waiting for things to get better.

“What I want to make clear is that we may have changed to Alang but there is no change in standard. We will work with a good yard and help it upgrade.”

Much of the debate at the forum centred on the improvements that many shiprecycling facilities have made, not only in India but also in Pakistan and Bangladesh.

They have been helped in their quest by Japan’s ClassNK, which has given its stamp of approval to four Indian yards — Leela Ship Recycling, Priya Blue Industries, Kalthia Shipbreaking and Shree Ram Vessel Scrapping.

Two more are expected to obtain approvals from ClassNK this year and another 10 or so are hoping to follow suit in the near future.

On average, the upgrades cost $1m per yard and, according to Global Marketing Systems (GMS) chief executive Dr Anil Sharma, when others see the ships coming into the approved “green” yards, they will be encouraged to spend the cash to upgrade their own facilities.

The well-known cash buyer says he has seen more owners seeking green recycling and he is worried that full capacity at the four Indian yards has been reached.

This has not gone unnoticed by other yards. “I expect that 50% of the yards in India will be certified as “green” by 2018,” Sharma said.

Concerns were raised by the shipping community about the discount shipowners face on the price when using India’s four ClassNK-certified yards.

“The premium for green recycling was much bigger than we expected,” said Simon Bennett, general manager of sustainable development at China Navigation Co, which sent a ship for recycling in India in January.

However, he says the company is willing to accept the discount in order to recycle its ships in a sustainable manner.

“Provided the yards don’t intend to recover their total investment from every ship, we will continue to support them,” he said.

Bennett and other industry stakeholders say they believe the premium attached to green recycling will diminish as more yards get involved and competition between them increases.

*This article by Jonathan Boonzaier was published in TradeWinds on March 11th, 2016
http://www.tradewindsnews.com/weekly/388425/india-narrows-green-scrap-gap